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Financial Constraints and Small and Medium Enterprises: A Review

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  • Bakhtiari, Sasan

    () (Department of Industry, Innovation and Science Australia)

  • Breunig, Robert

    () (Australian National University)

  • Magnani, Lisa

    () (Macquarie University, Sydney)

  • Zhang, Jacquelyn

    () (Australian National University)

Abstract

We review the literature on financial constraints and the performance of small and medium enterprises (SMEs). We consider the important role that SMEs play in the economies of Australia and the Organisation for Economic Cooperation and Development. We examine the role of financial constraints in SME growth, with emphasis on business cycles and credit access. We discuss issues that SMEs face in accessing financial resources for expansion. We look at the literature that evaluates the impact of financial constraints on key outcomes: employment, productivity and wages. We review key policy debates and consider where government involvement might be appropriate.

Suggested Citation

  • Bakhtiari, Sasan & Breunig, Robert & Magnani, Lisa & Zhang, Jacquelyn, 2020. "Financial Constraints and Small and Medium Enterprises: A Review," IZA Discussion Papers 12936, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp12936
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    Cited by:

    1. Breunig, Robert & Hourani, Diana & Bakhtiari, Sasan & Magnani, Elisabetta, 2020. "Do Financial Constraints Affect the Composition of Workers in a Firm?," IZA Discussion Papers 12970, Institute of Labor Economics (IZA).

    More about this item

    Keywords

    small and medium enterprises (SME); firm financial constraints; government business assistance; employment; wages; productivity; innovation;

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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